Taiwan has begun to develop standards for digital assets by proposing the Virtual Asset Management Ordinance Draft to the legislative Yuan.
This law seeks to define virtual assets, establish standards for organizations that handle these assets, safeguard customers, and force these companies to join industry groups and obtain regulatory permission.
Until date, Taiwan has taken a hands-off approach to the digital asset business, relying solely on existing rules governing client identification and anti-money laundering. However, after a famous cryptocurrency exchange named FTX went bankrupt in November, they opted to expedite the regulatory procedure. Many people in Taiwan chose FTX because it provided better US dollar interest rates than local banks.
In contrast to nearby Hong Kong’s crypto legislation, the draft bill does not strongly argue for particular rules addressing cryptocurrency derivatives or stablecoins.
However, it acknowledges that derivatives linked to virtual assets, such as perpetual contracts, have special characteristics that do not perfectly meet conventional financial standards. This acknowledgement makes way for potential future crypto derivatives laws. Unlike some other nations, like as Japan, the measure does not restrict the trading of virtual assets to only professional investors.
In Japan, licensed cryptocurrency exchanges must utilize custodians, but the draft bill simply requires that customer assets be kept separate from business funds. It does not specifically require the employment of third-party custodians.
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